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With Delhi High Court upholding termination of Canadian firm Canoro Resources’ contract for Amguri oilfield, the petroleum ministry may appoint Assam Co India Ltd (ACIL) as the operator of the oilfield in Assam.
A single judge Bench of the Delhi High Court on March 7 upheld termination of Canoro’s production sharing contract (PSC) for the discovered Amguri field in Assam.
Officials privy to the development said ACIL, which holds 40 per cent interest in the Amguri fields, is likely to be appointed the operator.
Oil regulator Directorate General of Hydrocarbons (DGH) had last year found ACIL competent to takeover operatorship of the field from Canoro who held 60 per cent stake in the field.
The “government of India may consider the request for appointment of ACIL as an operator for Amguri field replacing Canoro Resources and allocation/transfer of 60 per cent interest (of Canadian firm) to ACIL,” DGH had written to the oil ministry on July 28, 2010.
The termination followed Canoro not taking government consent for selling controlling stake to Mass Financial Corp.
Canoro had raised Canadian $95 million, or Rs 430 crore, last April 2009 through a mix of debt and equity from Barbados-based Mass Financial Corp without the required consent of the government.
Delhi High Court’s Justice Vipin Sanghi in the March 7 order stated: “I am of the prima facie view that the State, as a sovereign, cannot be understood to have irretrievably given up all its rights while entering into a contract, such that it is rendered helpless in a situation which threatens the national interest or security of State.”
“An interpretation, either of a law or a contract, which impinges on the sovereign power of the State to safeguard its vital and strategic interests (and not just commercial interests), would be eschewed by the Court to save the law, or the contract, from validity on the ground of it being opposed to public policy,” the court said.
The centre had issued a termination notice to Canoro on June 1, 2010 citing “national interests and government’s sovereign power on the national resources” as a reason.
In the termination order August 28 last year, the ministry said Canoro had violated Article 29.2 of the PSC by not seeking the government’s consent before making a “material change” in the shareholding of the company. Canoro had challenged the termination.
After the High Court order, Canoro said: “The issue of whether the company is in breach of the Amguri PSC remains subject to the determination of an arbitration panel. The company is reviewing all its options in connection with the said decision, including, without limitation, an appeal to a higher court.”
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